This is with regard to “Beyond the Black Money Bill” by Sucheta Dalal. The article has brought out the problems with respect to generation of black money. The Black Money Bill, aimed at bringing back black money stashed abroad, has not served the purpose. The declared amount is a pittance. Still, something is better than nothing.
The generation of black money needs to be plugged. The enforcement authorities have to concentrate on the following areas involving professionals from different fields. One way of obtaining information is to have a channel opened for people to freely report when they come across black money deals, giving some evidence or some trace of it. The areas where vigilance is required to prevent black money generation and money laundering are as under:
Allowing corporates to float any number of subsidiaries without any valid reason. These subsidiaries enable holders of black money to have some avenues of investments and both the holding companies and subsidiary companies declare losses routinely without being seriously probed by any authority. SEBI (Securities Exchange Board of India) should be vigilant and alert in preventing floating of such companies.
Imports and exports: Bank of Baroda (Ashoknagar branch in Chennai) is an example of how companies are allowed to open accounts freely without adherence to KYC (know your customer) norms or any other regulatory prescription. This must have been going on in several branches in a camouflaged manner as branch inspections are not carried out by the regulator these days. Liberalisation of regulation is essential but it should not lead to loot or indiscipline in conducting the affairs. There should be sufficient checks & balances.
Real estate: Black money is easy to invest in real estate. Unsold flats in various cities are a clear indication of the volume of black money held in real estate. RBI (Reserve Bank of India) policy rate cut cannot have any serious impact on the real estate prices, as holders of black money and banks, which have financed these real estate players, are not affected by such policy measures.
Purchase of farm lands and forming farm clubs in and around major cities has become a fashion these days; black and white money flows to these farm clubs. White money gets converted into black money and banks are also involved. The fact that the amounts are paid through banks does not mean that the money is white.
Purchase of gold, jewellery and other high-cost commodities: The dealers invariably insist on black money and they never entertain cheque or card payments. The income-tax authorities can visit bullion merchants incognito and experience it for themselves.
Dealers in furniture, furnishing houses spread over the entire country: They always insist on cash and they seldom take cheque or cards.
The list goes on; if the authorities can really be after them, the financial system in the country can be very clean and the revenues of the government can be augmented several times.
The informal economy, which is larger and bigger than the formal economy, needs to be fixed. The earlier it is done the better.
Gopalakrishnan TV, online comment
This is with regard to the recent letter to the editor “Do chocolates constitute coins (legal tender)?” by BV Krishnan in Moneylife (Issue dated 17 September 2015).
The near acute shortage of coins in circulation is due to the following factors:
a) Small coin depots are maintained by the State Bank of India (SBI).
b) Of late, RBI (Reserve Bank of India) has reduced the number of counters in its offices where people can exchange currency notes and coins. Thus issue of coins got restricted.
c) Coins are issued by the Government of India. RBI and SBI are only agents of the government.
d) Small coins up to Re0.50 have been discontinued by the government of India.
e) Some people stand in line at RBI and obtain coins and ‘help’ those outside the bank, who are in need of coins, for a small ‘fee’.
f) RBI has designated some banks to supply coins to the public. The banks, in turn, select some of their branches to do the job. The branches are hard-pressed for staff and think that it is a nuisance that is best avoided. They undertake the work only on some days and that, too, for selective customers. As no notice is displayed at the branches, the public hardly know about it and never dare to demand coins.
I hope that now you know who is responsible for the shortage of small coins. Retail traders have no recourse other than to issue chocolates (Re1 each) to their customers, who do not tender the exact amount.
P Ramachandra Rao, Hyderabad
This is with regard to “Stock manipulation: Stampede Capital”. The company has a celebrity shareholder.
There have been great capital gains for that shareholder. It has been a big bargain for the big shareholder.
R Balakrishnan, online comment
Where is The Well-Being?
This is with regard to “Buy stocks of consumer products companies, not their products” by R Balakrishnan. Excellent article! Mindless consumerism makes life pathetic. Thank God for giving some people the wisdom to write such an article. Perhaps, some policy-makers, sitting in high offices, would read it and get enlightened. Frugal and simple living and high thinking is what is required to live a fulfilling life. Anyway, the current of human collective wisdom is flowing down the drain and enlightenment will come after all is wasted. This economy looks like it has great GDP figures but where is the well-being?
SK Gupta, by email
HFT Should Be Banned!
This is with regard to “High Frequency Worries over HFT” by Sucheta Dalal. I am glad Moneylife has taken up this issue. HFT (high frequency trading) is one of those Western evils that have been blindly copy-pasted into India for the benefit of select vested interests. It needs to be banned entirely.
Prime Minister’s Schedule
This is with regard to “Beyond the Black Money Bill” by Sucheta Dalal. Since every decision in this regard is taken by the prime minister and is communicated through the prime minister’s office (PMO), it would be helpful for the PM to spend some time in Delhi. At present, he is either campaigning in states where elections are being held, or he is visiting a foreign country asking for FDI (foreign direct investment) and hobnobbing with NRIs (non-resident Indians) or celebrities.
Keep It Up!
This is with regard to “Insurance & Pension: Unclear Tax Rules Will Destroy Your Returns” by Raj Pradhan. Wow! What a comprehensive article, even for a seasoned insurance intermediary like me! It took me a while to understand all that you have written. There is a lot of confusion and nobody really knows what is right or wrong. Everybody is free to interpret the laws, as they deem fit, which is likely to be further confusing to the poor investor. Moneylife is like a beacon of hope for the retail and small investor. Keep it up!
Deepak R Khemani
Words of Wisdom
This is with regard to “Shortlisting Good Stocks” by R Balakrishnan. One humble request: if you could write an enlightening article on Indian pharma companies—opportunities, threats and how to manage risk. Because, every now and then, some Indian pharma company gets a savage cut to its market-cap due to the United States Food and Drug Administration’s (USFDA) notice on non-compliance. Sustainability is a big issue. You never know when you might get struck by a bolt from the blue. I would appreciate some words of wisdom.
This is with regard to “Retirement Homes Offer No Peace for Seniors” by Sucheta Dalal. It is a sad situation for our seniors who have worked so hard. The Tamil Nadu chief minister should do something as an initiative for other states, AMMA DAYCARE.
Sunil Kumar Hemnani